THE NEXT BIG THING?

Commercial-free prime-time shows—the Holy Grail of TV watchers—has come to Dish Network Corp.

And it's likely to wreak holy havoc.

On Thursday, the satellite-TV operator began offering its customers a DVR feature that allows viewers to completely avoid commercials—rather than just fast-forward through ads, as the old model digital-video recorders do.

The new "Auto Hop" feature comes on a DVR dubbed the "Hopper," a device that has been available to subscribers since March. With Auto Hop, viewers see a black screen momentarily where the ads were broadcast, or a glimpse of the first frame of the first commercial. Then the show resumes. Consumers merely have to click an on-screen Auto Hop button before a show to enable the feature. (click below to read more)

"You can put down your remote control" and not see an ad again for the entire show, said Vivek Khemka, vice president of Dish product management.

The "Hopper" DVR costs Dish subscribers $10 a month in addition to a $99 upfront fee. Dish also offers a less-expensive traditional DVR with no upfront charge and a $6 monthly fee. The "Hopper" is made by Echostar Corp., which like Dish is controlled by satellite-TV pioneer Charlie Ergen.

The notion that viewers won't see even a whirr of fast-forwarded ads threatens billions of dollars in broadcast television advertising—and risks the ire of the networks.

"There has been a problem with ad skipping and this is just making it worse," said Tracey Scheppach, innovations director at Starcom MediaVest, a media-buying firm owned by Publicis Groupe SA.

The feature is available on recordings of nationally broadcast prime-time programs aired on Walt Disney Co's ABC, CBS Corp's CBS, News Corp.'s Fox and Comcast Corp's NBC but watched after 1 a.m. the day after they air. Dish is the third biggest pay-TV distributor, with more than 14 million subscribers, trailing Comcast and DirecTV .

None of the broadcast networks affected had any immediate comment. News Corp. owns The Wall Street Journal.

Dish's move is likely to heighten tensions between TV network owners and pay-TV distributors—cable and satellite operators and phone companies. Relations are already strained because of rising programming costs. Broadcasters have been pushing to get a larger share of "retransmission fees," paid by the service providers that pipe or beam programming into homes. Traditionally, retransmission fees were paid almost entirely to cable channels, not broadcast networks.

Dish Chief Executive Joe Clayton in an interview acknowledged the tension over retransmission fees. "But that's a separate issue," he said. "The Auto Hop feature is all about the consumer."

Mr. Clayton trumpeted the new feature. "This has been the Holy Grail of television viewers for 40 years," he said. Dish didn't provide definitive numbers on how many customers have opted to get the Hopper, but Mr. Clayton said it's a "big number."

"What's wrong with giving the consumer what he wants?That's my response to anybody who takes issue with this," Mr. Clayton said.

Introduction of DVRs several years ago raised widespread concerns about the impact on TV advertising. The impact so far has been mixed. The devices have been widely adopted and are now in about 43% of U.S. households, according to Nielsen. Media buyers say about 50% of ads get skipped by DVR users.

Yet TV advertising has increased from $51.6 billion in 2003, when DVRs became widely available, to $58 billion in 2011, according to Publicis Groupe SA's Zenith Optimedia

Marketers say TV is still a crucial medium for advertising, given its broad reach. Nielsen has developed ratings measures that track how many people watch ads that appear during programs up to three days after it airs, which is reflected in ad deals.

Still, DVRs have changed marketing tactics. Advertisers have worked overtime to embed their products and pitches within the shows. Product placement over the past few years has soared and become a major part of most media companies' offering to advertisers.

Dish makes clear that it isn't deleting the advertising from the recorded material; if customers want to watch all the ads, they can. "We spend hundreds of millions on advertising per year," Dish's Mr. Khemka said. "I don't think it makes a very big difference from our perspective to the advertising market."

Unlike cable channels, broadcasters earn relatively little in subscription fees. Advertising accounts for the vast majority of broadcast networks' revenue. CBS, for instance, collected $209 million in subscription fee revenue in 2011, compared with $4.9 billion in ad revenue, according to market researcher SNL Kagan.

Now, broadcasters are pushing for higher retransmission fees to bolster revenue. But pay-TV executives are balking at the costs—and are following a legal battle that could give them more leverage in their negotiations.

Pay-TV distributors, including Dish and DirecTV, have said they are closely watching litigation between broadcasters and Aereo Inc., an online video-streaming service that offers broadcast network signals for New York residents. Aereo, which is backed by media veteran Barry Diller among others, has been sued by broadcasters claiming copyright infringement.

"If it is found to be legal, not paying retransmission consent, it's a very interesting thing," Time Warner Cable Chief Executive Glenn Britt said on a recent conference call. Derek Chang, who oversees programming negotiations for DirecTV, said in an interview the case "could impact some of the dialogue going forward."